U.S. Retail Sales Unexpectedly Drop For Second Straight Month In June

A report released by the Commerce Department on Friday showed U.S. retail sales unexpectedly decreased for the second consecutive month in June.

The Commerce Department said retail sales fell by 0.2 percent in June after edging down by a revised 0.1 percent in May.

The continued drop in sales surprised economists, who had expected sales to inch up by 0.1 percent compared to the 0.3 percent decrease originally reported for the previous month.

The unexpected decrease in retail sales was partly due to a steep drop in sales by miscellaneous store retailers, which plunged by 3.1 percent.

Department stores, food services and drinking places, and grocery sales also reported declines in sales during the month of June.

On the other hand, the report showed increases in sales by building materials and supplies dealers, non-store retailers and health and personal care stores. Sales by motor vehicle and parts dealers also inched up by 0.1 percent.

Excluding auto sales, retail sales still dipped by 0.2 percent in June following the 0.3 decline seen in May. Ex-auto sales were expected to rise by 0.2 percent.

The Commerce Department said closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, edged down by 0.1 percent after coming in unchanged in May.

Michael Pearce, a U.S. economist at Capital Economics, said, "The decline in retail sales in June was fairly broad based and suggests that spending growth has lost a bit of momentum going into the third quarter."

"But consumption growth still appears to have rebounded from 1.4% in the first quarter to between 2.5 and 3.0% in the second," he added. "Furthermore, the strength of consumer sentiment suggests that it will grow at a steady pace over the rest of the year too."

Despite the monthly decrease, the Commerce Department said retail sales in June were up by 2.8 percent compared to the same month a year ago.